Moved from Tax Credits to UC and now entitled to nothing?

blackbat2

Hi All

Could anyone advise please?

I moved from Child Tax Credits (2 children) to UC at the end of August.

I have been informed that I now qualify for absolutely nothing, after being entitled to around £50 / month with Tax Credits.

The reason is, that under Tax Credits, you were allowed to deduct any personal pension contributions from your income, but this is not permitted with UC and all they take into account is your take home pay each month.

Obviously loosing £50 per month isn't great, but it also means that I no longer qualify for Cost of Living payments, which have really helped us in the past.

Can anyone advise please and has anyone found themselves in the same position?

I believe that many working parents are worse off on UC and even Transitional Protection means I still get absolutely nothing.

Thanks in advance.

kaMelo

Pension contributions are an allowable deduction under UC but how the pension contributions are made matters.
Are they made as a deduction from salary or do you make them yourself?
If a deduction from salary are they net pay or relief at source?

Alice_Holt

"The reason is, that under Tax Credits, you were allowed to deduct any personal pension contributions from your income, but this is not permitted with UC and all they take into account is your take home pay each month."

 This is permitted under UC legislation, but you need to notify UC of these payments, sadly many UC staff aren't aware of this and take incorrect decisions.

"Deductions from employed earnings

UC is generally based on net income and therefore from the claimant’s employed earnings can be deducted:

• Any relievable pension contributions made to a registered scheme
• Income tax or national insurance contributions paid in the assessment period in respect of those employed earnings (note that although the legislation states only tax and NI in respect of the employed earnings can be deducted, in practice any tax that is paid is deducted even if it does not relate directly to the employment)"
  
  

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1150813/admh3.pdf

  
 Some time back there was a thread by a forumite who had to take the DWP to appeal to have their personal pension contributions taken into account by UC, as the UC staff continually made incorrect decisions.

peteuk

blackbat2 said:.

The reason is, that under Tax Credits, you were allowed to deduct any personal pension contributions from your income, but this is not permitted with UC and all they take into account is your take home pay each month.

There are a few ways to look at this…. But given your quote above I assume your pension contribution is not deducted from your salary.

…. If you reduced your pension payment would you have still have qualified for tax credits?  Do you have another pension or is this a voluntary further payment.  Its a well know tax avoidance/child benefit dodge to increase your pension payment for gain (not that I’m implying that here)

You’re loosing £50 a month and £301(COL) a quarter with the last COL payment currently being Spring 2024.   How much are you paying to your pension per month?  Is your £0 UC award for a certain month (due to your wage increasing for the assessment period eg two wages in the assessment period, overtime, back dated pay)

Can you change your life style?  You didn’t/dont qualify for UC so you’ll either need to spend less or earn more, sadly wherever the cut off point is made there is always someone just below and just above that point.

Hopefully someone with more knowledge of the transition period will be able advise you further.  However what occurred to make you claim UC?  If you were forced transition then a zero UC claim allows a 3 month protection period (I believe)  

blackbat2

Alice_Holt said:

"The reason is, that under Tax Credits, you were allowed to deduct any personal pension contributions from your income, but this is not permitted with UC and all they take into account is your take home pay each month."

 This is permitted under UC legislation, but you need to notify UC of these payments, sadly many UC staff aren't aware of this and take incorrect decisions.

"Deductions from employed earnings

UC is generally based on net income and therefore from the claimant’s employed earnings can be deducted:

• Any relievable pension contributions made to a registered scheme
• Income tax or national insurance contributions paid in the assessment period in respect of those employed earnings (note that although the legislation states only tax and NI in respect of the employed earnings can be deducted, in practice any tax that is paid is deducted even if it does not relate directly to the employment)"
  
  

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1150813/admh3.pdf

  
 Some time back there was a thread by a forumite who had to take the DWP to appeal to have their personal pension contributions taken into account by UC, as the UC staff continually made incorrect decisions.

Thank you, this is really helpful.

So my next course of action is now to contact UC and make them aware of this and also prove my personal pension contri]butions?

Are they calculated the same way as you do under Tax Credits, i.e. Total Contributions / 80 x 100 = Total amount deductable

kaMelo

How are your contributions made, by yourself or deducted from salary? Until we know that we can't accurately advise what to do.

blackbat2

Hi Everyone

Thanks for your help.

I have a works pension, which is deducted from my salary by my employer.

I also make a contribution into a private pension, which under the old Tax Credits system, could be deducted from your salary / income figure.

I have been continually told, that this is not permitted under Universal Credit, but the advice above would suggest otherwise.

I have a UC advisor, who continually refuses to look at my calculations, S they insist this is not permitted. 

I have now asked for a Mandatory Review to reconsider this. 

Any further ideas / help would be gratefully received. 

Jyana

blackbat2 said:

Hi Everyone

Thanks for your help.

I have a works pension, which is deducted from my salary by my employer.

I also make a contribution into a private pension, which under the old Tax Credits system, could be deducted from your salary / income figure.

I have been continually told, that this is not permitted under Universal Credit, but the advice above would suggest otherwise.

I have a UC advisor, who continually refuses to look at my calculations, S they insist this is not permitted. 

I have now asked for a Mandatory Review to reconsider this. 

Any further ideas / help would be gratefully received. 

 I don't think there can be any answers to this question until you answer the important question that's been asked a couple of times already upthread:
 

kaMelo said:

Pension contributions are an allowable deduction under UC but how the pension contributions are made matters.
Are they made as a deduction from salary or do you make them yourself?
If a deduction from salary are they net pay or relief at source?

Once the answers to this are known, advice can be given.

peteuk

Jyana said:

blackbat2 said:

Hi Everyone

Thanks for your help.

I have a works pension, which is deducted from my salary by my employer.

I also make a contribution into a private pension, which under the old Tax Credits system, could be deducted from your salary / income figure.

I have been continually told, that this is not permitted under Universal Credit, but the advice above would suggest otherwise.

I have a UC advisor, who continually refuses to look at my calculations, S they insist this is not permitted. 

I have now asked for a Mandatory Review to reconsider this. 

Any further ideas / help would be gratefully received. 

 I don't think there can be any answers to this question until you answer the important question that's been asked a couple of times already upthread:
 

kaMelo said:

Pension contributions are an allowable deduction under UC but how the pension contributions are made matters.
Are they made as a deduction from salary or do you make them yourself?
If a deduction from salary are they net pay or relief at source?

Once the answers to this are known, advice can be given.

Its answered …

“I have a works pension, which is deducted from my salary by my employer.
I also make a contribution into a private pension”

So the works pension which is taken at source will not effect your UC, as its calculated on take home pay.  Your private contribution may or may not be taken from your wage but the payment (like student loans taken from wages) isn’t, so if this second payment is taken from your wage then UC will take your take home pay and add the payment back.

There is away around this has noted in previous replies.

the_pink_panther_2

Please keep us posted.  I imagine that there would be others in similar situations would benefit from finding out how this is resolved. 

Jyana

@blackbat2 I have found an old thread that may be the one referenced above as there are several people mentioning having to go to appeal and having to get their MPs involved that their appeal in order to get their registered pension recognised. It has many links in it which may well prove helpful.

https://forums.moneysavingexpert.com/discussion/6001734/universal-credit-and-private-pension-contributions/p1

Ridiculous that after what looks like over four years that they are still getting it wrong.